Zubkov Calls for More Russian Food

Itar-TassDeputy Prime Minister Alexander Zhukov, Nabiullina and Zubkov sharing a smile ahead of Tuesday's meeting.
Prime Minister Viktor Zubkov intensified calls Tuesday for the government to prop up the country's agricultural industry and raise the domestic portion of food products sold to 70 percent by 2012.

At a meeting with officials from the Economic Development and Trade Ministry, Zubkov said the state should play an active role in boosting production, while he also called for greater regulation to smooth out price fluctuations.

The call appears to reflect the government's growing concern about inflation, which jumped last year to 11.9 percent on the back of soaring food prices, which government officials have attributed in part to growing imported food costs. Monday, the ministry raised its 2008 forecast for inflation by one percentage point to 9.5 percent, after witnessing rapid price growth in February.

Soaring food prices, particularly of staples such as bread and dairy products, prompted the government late last year to back the introduction of voluntary price curbs on "socially important" food products. Economic Development and Trade Minister Elvira Nabiullina has strongly criticized proposals for longer-term price controls.

President-elect Dmitry Medvedev acknowledged that global food prices were driving up inflation in the country. "We are forced to buy many food products from overseas, and given the way prices are going up on world food markets, this is also having an impact [on inflation]," Medvedev said in an interview published Tuesday in the Financial Times.

But analysts were skeptical that the government's measures would have a substantial impact on inflation. "It could definitely impact food inflation in Russia, but if we analyze inflationary trends, only 30 percent of the consumer basket is food. ... [The sources] of inflation will still remain high," said Yulia Tseplyayeva, an economist at Merrill Lynch.